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Your Bottom Line

News/Business. Christine Romans. Financial advice. New.

NETWORK
CNN

DURATION
00:30:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 759 (CNN HD)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
1920

PIXEL HEIGHT
1080

TOPIC FREQUENCY

U.s. 9, China 6, Us 6, America 5, Sal Khan 2, Irvine 2, Christine Romans 2, Lance 2, Pittsburgh 2, Germany 2, Rome 2, Joe Biden 1, Lance Armstrong Tyler Hamilton 1, Randi 1, Peter Navarro 1, Starbucks 1, Khan Academy.org 1, Caterpillar Or Gm 1, Alec Jr 1, Lord 1,
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  CNN    Your Bottom Line    News/Business. Christine  
   Romans. Financial advice. New.  

    October 13, 2012
    6:30 - 7:00am PDT  

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former cyclist and teammate of lance armstrong tyler hamilton said he began dopeling with lance and for lance. he is one of ten former teammates who testified to the anti-doping agency revealing what the agency called the most sophisticated professionalized and successful doping program that sports has ever seen. armstrong continues to deny the allegations. well, thanks so much for watching today. i will see you back here at the top of the hour with the shuttle "endeavour" on the move in l.a. but first, christine romans has "your bottom line," right now. all right. thank you, randi. see you at the top of the hour. good morning, everyone, i'm christine romans and we are seeing real signs of a recovery and slow signs of a recovery, but is it enough? slow growth, a fiscal cliff and economic uncertainty -- could america today be rome before the fall? historians tell us that the romans like civilians before and
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after collapsed under the weight of debt and partisan bickering and the overextended military and plain ole fiscal irresponsibility and sound familiar? today the u.s. has record debt, $16 trillion and fuelled in part by stimulus spending and tax breaks for everyone and expensive wars abroad and whose fault is that? >> the president's policies have not gotten america working again. >> our goal was to turn it around. >> and the president has to stand up to take responsibility for it. >> we inherited the worst economic and financial crisis since the great depression. >> reporter: but what matters more is how we fix it. it is time to rebuild rome and here how we do it. first, do everything possible to put americans back to work, because nothing is more important to the recovery than reyating job, and revamp the workforce which means to revamp the schools and colleges to turn out workers who can compete in the labor force of tomorrow. and reduce the long-term debt and deficit and implement a plan
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thou to pay back what we owe instead of dumping on future generations. so who has the best plan to fix america over the next four years and beyond? that is is the question to ask for the glory of rome. dramatic, i know, but happy saturday. are we closer to fixing this economy before it is too late? some recent signs of recovery say yes. unemployment down the 7.8%, and that the lowest rate since president obama took office. claims for first time unemployment benefits fell to levels not seen since 2008, and some technical details going on there, but the trend is clear. and real estate collapse got us into the mess, but now the housing prices are timely starting to rise. i will say it again, housing prices are starting to rise and foreclosures fell to five-year lows last month. so how do we make sure that the economy really heals? two different philosophies and one being very big election coming up to fix it. president obama says thathe businesses need the tax incentives to create more jobs, and he says that the government
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needs to step in and the government needs toinvest in programs now that can pay off later. manufacturing, green energy, instra trui inf infrastructure and aid for state and local governments. mitt romney says to get the government out of the way. and former new york times columnist bob herbert is a ceo of a left leaning think tank, and also joining us is the director irvine institute in irvine. and peter, do you think that the country sees incentives to move the jobs abroad and it does not matter what the government does to help? >> well, that is right if we understand what the problem is here. if you look at what globalization has done over the past few decades, we have a basically a destruction of the job destruction ecosystem, and the way it works, christine, is
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simple. if caterpillar or gm decides to offshore the production instead of building a factory in peoria or detroit, what you have is a loss of jobs right there of the big company, and then what you lose next is the supply chain which creates many, many more times number of jobs as the big oems and the original equipment manufacturers and once that supply chain is gone, then you lose the service sector jobs, so that manufacturing creates service sector jobs, but the service sector jobs don't create manufacturing. >> i want the bring in bob. are you confident if the president wins a second term that the little signs of the recovery summer as joe biden called it 28 months after the recovery summer, do they continue with a second term of obama? >> i am not confident and in addition to the globalization problem is the labor saving technological devices when you talk about dispensing with american jobs and the economy
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tot totally linked to the good jobs you don't have the consumer demand tor capability to buy the goods and services that we can produce. that is is what we need to do. we need to address the demand thing. >> that is where you spend money now. >> exactly. that is where you spend the money on the infrastructure which we have to fix anyway and you spend the money on new green energy-type initiatives, and you spend, as you pointed out, money on the education which is really important, because you need a better educated workforce for the good jobs, and in order to pay for all of that, which costs a lot of money, there is going to have to be a real sacrifice in the country. you will have to raise taxes and standards of living have to come down somewhat. >> peter na varer row, you can't tell people that you are going raise their taxes, and being honest somehow in the american political arena is somehow not possible. >> well, you should not buy into bob's narrative here. it. it is simply gone. if you look athe green energy
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issue, it totally proves my point. i was in pittsburgh last week with the death by china film, and they talked about how they tried to start a couple of green energy companies in pittsburgh, but they were totally crushed by china's totally unfair trade practices, so it is virtually impossible forrer the green industries here in the country to given the weight of the subsidies of china to run that. the idea of this whole notion of innovation and robots taking over, that is not the problem, bob. the counter factual there is germany. germany has 25% of the men and women in the workforce working in manufacturing and the highest level of automation that you can have. we have 9%. we have to figure out a way to start produce more thanwe consume, and when we do that, we will get the wages and the income to create te d mahe dema are talking about.
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it is insane for the government to spend more in an economy that does not have the engine to create the jobs, because it has gone offshore. >> you have different views to spin. you want tax reform and trade reform. peter navarro, i hope they are talking about such things in washington and not just talking about getting re-elected. thank you, gentlemen. he is a teacher and bill gates is one of the students, and the future of the government does not depend on unions or anything other than that man that you will meet in three minutes. but mr. single miles can't join his friends because he's getting hit with blackouts. shame on you. now he's stuck in a miniature nightmare. oh, thank you. but, with the capital one venture card... you can fly any airline, any flight, any time. double miles you can actually use. what's in your wallet? alec jr? it was a gift.
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america spends more time and more money on the education system than almost every other developed nation, spending a ll of the time and the money and we are running in place. teachers here spend around 1,100 hours a year with students and more than nearly every other developed country and we spend $10,500 a year on average per high schoolstudent. and yet, american students rank 27th in math, 19th in science and 13th in reading.
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china is pumping out engineers by the hundreds of thousands and ten times as many as the u.s. so far the american advantage has come from quality and not quantity, and the world economic resource says that all of u.s. engineering grads are employable and only 10% of china's grads. as china turns out engineers and scientists, it is only a matter of time before the quality gap grow grows, but here we are struggling to make our kids ready for higher education, and president obama included $100 billion in federal stimulus for public schools and he wants these things attached, student and teacher assessments and more efficient spending of the hundreds of thousands that we already spend. and i want to introduce you to sal khan and bill gates called
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him a teacher to the world and giving us a all of the glims of future of education, and he does it without a classroom, and without a department of education bur kra i is and little overhead, but no unions. he has three m.i.t. degrees and another from harvard and you can download the brain for free at khan academy.org. and he is author of the book "one world schoolhouse" and he was also named one of fortune's 40 under 40. and sal, congratulations. that is a big honor of the 40 under 40. and i want to ask you about the american education system and largely through the stimulus of the president with the goal of teacher accountability and get students better prepared for the knowledge economy, it is working? >> well, it is too early to know whether some of the later measures are working. i think that as you alluded to, there are things that we should not be complacent about and are worried about. i don't know get as worried about the ranking so to speak
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and not worried about them, but i amp more worried about how students do participate in the economy. one thing i point out is that the u.s. might, sure, we might be low in the rankings in math and science but still the most innovative country in the world and if you look at the innovation over the last 50 years,t is more and more concentrated inside of the u.s. and because beyond the core engineering and math skills, we have the entrepreneurship, and we don't stigmatize failure like other parts of the world. and asia and singapore and other parts of the world come to get more creativity in their students, but with that said -- >> there is one silicon valley and in the u.s. and we are struggling to get the fifth grades up to grade level, but others are saying this rule of law and the creative e kcono and the knowledge-based stuff is exciting and other countries
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want to figure out how the model it. >> exactly. so the core issue is that america as a whole is in a good position. but what i do worry about is who gets to participate in that. is it just going to be the 1% or the 2% who happen right now to get an engineering degree or much broader? for me the main issue right now of students who go the college a substantial number of students, 20% to 30% have to essentially retake the sixth grade math of those who want the go into the engineering. and it is not a problem of those who want to go, but less than half finish the curriculum because of the weaknesses in the skills. >> yes, and i know that college-ready and the a.c.t. tells us that 1 in 4 high school students graduates ready for college in all of the subjects and you go the college and take on all of the student debt and it is like the barriers one way after another, but you say in the book, and in particular, you say that a rigorous high quality education can be delivered for far, far less money.
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tell me how. >> well, the main issue and for me it is not a money issue, and you can never really say you are overspending on the education, because it is so important, but you can say that we can spend it much better. and the one thing that i talk about is in the book is, you know, all of the focus is on how do we fix the existing model, but a question of is the model, itself, even right? what a lot of people don't realize is that the mod of education where we group kids together and the age-based cohorts and move them together at a set pace and give them the grades and the bell rings every hour, and this is a 200-year-old model and not the way that humans naturally learn. it comes out of the industrial revolution and we inherited it from the prus shsians, but it i country that does not exist anymore. so instead of getting a c on an exam in basic exponents and the current model, instead of getting a c, it pushes me on to the next concept expect meg to
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g -- expect meg to get ing me to by the time i got to college i have to relearn sixth grade math. in the khan academy, you can have interactive conversations and more creative projects. the one thing i talk about in the book is instead of making our prussian model like the prussian model in finland or south korea, we should make our prussian model an american model which is more focused on the creativity and innovation and more focus on, look, if you failed that is not going the mean that you are stupid, but you need to work harder, because we want you to master the concept. >> sal khan, i love exponents and prussians, and i love to have you over for a chat. thanks for dropping by. the book is great, and any parent can really get a lot out of it. thank you, sir. up next, guess how much
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money the u.s. government spend s for every dollar it spends? the number will shock you. online outfit piccolo headphones buy now broadway show megapixels place to sleep little roadster war and peace deep sea diving ninja app hipster glasses 5% cash back sign up to get 5% everywhere online through december. only from discover.
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we need to talk about how the government gets a grip on spending, because without that, we can't rebuild america. the government borrows 43 cents for every dollar it spends. the national debt has shot up to almost 73% of gdp. about 19 points higher since president obama took office. two expensive wars, ten years of tax cuts and stimulus spending in response to the worst financial crisis since the great depression all drove up our debt. the u.s. deficit, how much more we spend than we take in, it's forecast to reach 7% of p this year. the biggest spending goes to
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medicare, medicaid, and especially social security. the solution is simple, but politically, it's difficult. raise revenues, that includes raising taxes and making more people pay taxes, and cut spending, including those popular entitlement programs. doing those two things now could hurt the economy in the near term. but if we don't start planning at least to rein in our spending, the economy would suffer even more in the long run. that's according to a study by economi economists. when a country's level of debt reaches 90% of gdp, its economy could shrink by one percentage point every year. at today's levels of government spending, we're headed to that 90% mark by 2014. wow! alice was director of the office of management and budget under president clinton and was first director of the congressional budget office. welcome to the program. >> thank you very much. >> now that i've terrified everyone, let's look at the short-term thinking here that led to the fiscal cliff.
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that in particular, if you think falling off the fiscal cliff can happen, senator allen simpson of simpson-bowles disagrees. >> they believe that no congress could be this stupid, and by god, they can. >> and by god, they can. in your career, have you ever seen congressional malpractice to this degree? >> i've never seen the country this polarized and the parties acting in such partisan and self-serving ways. we've got to get past this election and restore some sense of civility. get to work, both parties this fall, the problems that beset us. the problems aren't insoluble. with all respect to carmen rinehart, who made major contributions, there's nothing magic about some particular point where the economy goes
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downhill. but we're in danger -- we have endangered ourselves by taking on escalating amounts of debt, which will keep going on in the future. we have to get our economy back recovering, growing faster, and we have to get our debt under control. that means our debt should not be growing faster than the economy. it's very simple. >> and what kind of progress have you seen on that in the past year since the u.s. credit rating was downgraded? i mean, here we are again at the 11th hour. the 11th hour talking about big changes, a lame duck congress presumably is going to have to work with a president who could be a new president and we don't have any clear signal of how to fix this. >> oh, i think we do. i served on the simpson-bowles commission. that was a bipartisan group and we came up with a sensible bipartisan solution. any solution to the rising future debt has got to include
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two things. slowing the rate of growth of medicare, medicaid, and social security. remember, i didn't say cutting, i say slowing the rate of growth. and raising more revenues from a simpler and more efficient and effective pro-growth tax system. we can do both. simpson-bowles had laid out a blueprint. i also worked with my old friend, the republican from new mexico, on a similar plan. so the blueprints are there. and i think we know what to do, almost everybody in the congress knows that we have to do some of those two things. >> well, i'm encouraged by your optimism. i mean, your realism about the problem, your optimism that they all know that we're now at the moment where they can fix it. we do know that eight senators met this week. getting at least a framework for how to fix it under way and they do have the blueprints in your plan.
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very nice to see you. have a wonderful weekend. thank you. >> you're very welcome. i'm going to tell you something no politician will ever admit. >> i'm a single mom, and i work, i work full-time, and i think i will definitely notice if i have to budget differently. >> you're getting a $1,000 pay cut next year. i'll tell you where it's going. . but, i have an idea. do you want a princess dress? yes how about some cupcakes? yes lollipop? yes! do you want an etch a sketch? yes! do you want 50% more cash? no you got talent. [ male announcer ] the capital one cash rewards card. with a 50% annual cash bonus it's the card for people who like more cash. what's in your wallet? i usually say that.
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i'm going to tell you what no campaigning politician will. your taxes are going up next year. even if congress fixes the fiscal cliff, there is one tax break that is almost certain to disappear. a tax break for all working americans. it's called the payroll tax holiday, and when it expires january 1st, paychecks for 160 million americans will get smaller. if you make $50,000 a year, you'll take home a thousand dollars less next year. you'll have less money to spend, and the left-leaning economic policy institute says the payroll tax cut alone will cut economic growth and will cost one million jobs. let's put it in perspective. that means the tax man is getting what your family could be spending each week on, say, six lattes at starbucks or five gallons of regular unleaded. 15 dozen eggs, or seven gallons of orange juice. every week. you don't have to eat 15 dozen eggs a week to understand how much money a thousand dollars a year is. imagine if we go over the fiscal cliff and your taxes g